House prices in London are set to suffer a more severe blow than any other part of the UK, according to the first major survey to be conducted in the wake of last month’s shock Brexit vote.
Chartered surveyors in the capital expect prices to tumble during the next 12 months, as post-referendum fears grip the property sector.
Across the UK as a whole, surveyors report that the level of interest from prospective homebuyers has collapsed to its lowest level since the depths of the financial crisis.
The research – published this morning by the Royal Institution of Chartered Surveyors (RICS) – shows that London’s housing sector will bear the brunt of the downturn. Over the next three months, 54 per cent more respondents in London expect to see prices fall rather than rise – a worse ratio than in any other part of the country.
A balance of 39 per cent of surveyors believe that prices in London will fall during the whole of the next year. A RICS spokesperson said that the poll was conducted once the outcome of the 23 June referendum was known.
Prices in the capital have already begun to slide, according to RICS, partly due to factors other than the referendum. “London has been one of the areas hardest hit with anecdotal evidence suggesting both the EU result and the tax changes, which took effect at the beginning of April, as having an impact on sentiment,” the report said.
Nervousness in the capital is also set to affect the number of properties that come on to the market. “Fifty-five per cent more chartered surveyors saw a fall in new instructions rather than a rise in June,” the report said – a sharp jump from a balance of 29 per cent in May. In April, surveyors had reported a rise in new instructions.
Housing activists argue that more properties need to be built in London irrespective of short-term movements in prices. RICS data shows that, even if prices decline over the next year, they are still expected to be higher five years from now.
A balance of 12 per cent of surveyors think prices in the capital will climb over the next half-decade. Across the UK as a whole, a positive balance of 14 per cent of chartered surveyors believe that prices will grow over the coming five years.
“The critical influence looking further ahead is how the economy performs in the wake of the uncertainty triggered by the vote to leave,” said RICS chief economist Simon Rubinsohn.